1550-0NEW.SAFE.SupportiingStatement

1550-0NEW.SAFE.SupportiingStatement.doc

Registration of Mortgage Loan Originators

OMB: 1550-0127

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Supporting Statement

For the S.A.F.E. Act

ICR


A. Justification


  1. Circumstances and Need


This statement supports a request for OMB approval of collections of information contained in a joint Notice of Proposed Rulemaking by the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the National Credit Union Administration (Agencies) proposing amendments to their rules in order to implement the Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act) which was enacted as Title V of the Housing and Economic Recovery Act of 2008, Pub. L. No.110-289. The S.A.F.E. Act requires an employee of a bank, savings association, or credit union and their subsidiaries regulated by one of the Agencies or an employee of an institution regulated by the Farm Credit Administration (collectively, Agency-regulated institutions), who engages in the business of a residential mortgage loan originator (MLO) to register with the Registry and obtain a unique identifier. This proposal implements these requirements. It also provides that these Agency-regulated institutions must require their employees, who act as MLO’s to comply with this Act’s requirements to register and obtain a unique identifier, and must adopt and follow written policies and procedures to assure compliance with these requirements. The OTS proposed regulation implementing the SAFE Act will be added to 12 CFR Part 563



  1. Description of the Information Collection and Its Use


The information collected will improve the flow of information to and between regulators; provide accountability and tracking of MLO’s originators, enhance consumer protections, reduce fraud in the residential mortgage loan origination process and provide consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, MLO’s.


3. Use of Technology to Reduce Burden


Federal registration and state licensing and registration must be completed through the Nationwide Mortgage Licensing System and Registry; a web-based system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage regulators jointly through the State Regulatory Registry LLC. The electronic form is stored in a secured, centralized repository.


4. Efforts to Identify Duplication


Substantially all of the information collected is not otherwise available.


5. Minimizing the Burden on Small Entities


Pursuant to § 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise required under § 604 of the RFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short, explanatory statement in the Federal Register along with its rule.

We have estimated that this proposal will not have a significant economic impact on a substantial number of small entities.  Specifically, we estimate that 385 small thrift institutions are likely to be impacted by the NPRM, with an average total compliance cost per thrift estimated at $13,300. Therefore, pursuant to § 605(b) of the RFA, the OTS hereby certifies that this proposal will not have a significant economic impact on a substantial number of small entities.  Accordingly, a regulatory flexibility analysis is not needed. 


6. Consequence of Less Frequent Collections


Compliance with the S.A.F.E. Act requires timely registration, annual registration renewals and maintaining the accuracy of information supplied.


7. Special Circumstances


None


8. Consultation with Persons Outside the OTS


In addition to meetings and telephone conferences with staff from the other agencies participating in this rulemaking, there have been calls with industry groups regarding the status and implementation of the rulemaking and with staff of the Department of Housing and Urban Development. The Agencies published an NPRM on June 9, 2009 allowing the public sixty days to comment (FR 74 No. 109).



9. Payment to Respondents


None.


10. Confidentiality


Information deemed confidential is exempt from public disclosure under the Freedom of Information Act (5 U.S.C. 552).


11. Information of a Sensitive Nature


None.


12. Burden Estimate


Summary: As shown below, the total annual burden of 536,305 hours comprises recordkeeping, disclosure and reporting burden for two categories of respondents: (a) OTS regulated Savings Associations and their subsidiaries of which there are 1022, and (b) employees of OTS regulated Financial Institutions who are residential mortgage loan originators (MLO) of which there are expected to be 48,958.


MLO Reporting Requirements. Unless the de minimis exception or a different implementation period applies, §563.103(a) would require an employee of an institution who engages in the business of a residential mortgage loan originator to register with the Registry, maintain such registration, and obtain an unique identifier. Under §563.103 (b), an institution must require each such registration to be renewed annually and updated within 30 days of the occurrence of specified events. Section 563.103 (d) describes the categories of information that an employee, or the employing bank in the employee’s behalf, must submit to the Registry, along with the employee’s attestation as to the correctness of the information supplied, and his/her authorization to obtain further information. The OTS estimates that to comply with the MLO reporting requirements the 48,958 MLO respondents will take on average 2.50 hours annually for initial registration, for a total estimated burden hours for MLO initial reporting of 122,395 hours. In addition, OTS estimates that 24,479 MLO employees will be required to update annually which will take on average .25 hours for a total estimated burden for registration update of 6,120 hours. The grand total estimate of MLO burden hours for reporting is 128,515 hours.


MLO Disclosure Requirement. Section 563.105 (b) requires the MLO to provide the unique identifier to a consumer upon request. The OTS estimates that to comply with the MLO disclosure requirements, the 48,958 MLO respondents will take on average one hour annually for a total estimated burden hours for MLO disclosure of 48,958 hours.


Financial Institution Reporting Requirements. Section 563.103(e) specifies institution and employee information that an institutions must submit to the Registry in connection with the initial registration of one or more MLO’s, and thereafter to update. The OTS estimates that to comply with the institution disclosure requirements, the 1022 institution respondents will take on average one hour annually for a total estimated burden hours for MLO disclosure of 1022 hours.


Financial Institution Disclosure Requirements. Section 563.105 (a) would require the institutions to make the unique identifier of MLO employees available to consumers in a manner and method practicable to the institution. The OTS estimates that to comply with the institution disclosure requirements, the 1022 institution respondents will take on average 50 hour during the first year to set up its systems for a total estimated burden hours for institution disclosure of 51,100 hours. The OTS anticipates that the burden hours during ensuing years will be informed by actual experience, but are anticipated to be substantially reduced.


Financial Institution Recordkeeping Requirements.


Section 563.103(d)(xii) would require the collection of MLO employee fingerprints. The OTS estimates that to comply with this institution recordkeeping requirement, the 1022 institution respondents will take on average 40 hour during the first year to set up applicable systems, for a total estimated burden hours of 40,990 hours.


Section 563.104 would require that an institution employing MLO’s to:


Adopt and follow written policies and procedures, at a minimum addressing certain specified areas, but otherwise appropriate to the nature, size and complexity of their mortgage lending activities. The OTS estimates that to comply with this institution recordkeeping requirement, the 1022 institution respondents will take on average 100 hours during the first year, for a total estimated burden hours of 102,200 hours.


Establish reasonable procedures and tracking systems for monitoring registration compliance. The OTS estimates that to comply with this institution recordkeeping requirement, the 1022 institution respondents will take on average 120 hours during the first year, for a total estimated burden hours of 122,640 hours.


Establish a process for, and maintain records related to, employee criminal history background reports and actions taken with respect thereto. The OTS estimates that to comply with this institution recordkeeping requirement, the 1022 institution respondents will take on average 40 hours during the first year to set up applicable systems, for a total estimated burden hours of 40,880 hours.


The grand total of the foregoing estimated annual burden hours for institution recordkeeping requirements during the first year is 407,790 hours.


The OTS anticipates that the burden hours during ensuing years for institution recordkeeping requirements will be informed by actual experience, but are expected to be substantially reduced.


The OTS estimates the cost burden to respondent institutions as follows:


Institution-Implement Policies and Procedures, Maintain Criminal Report Records and Tracking Systems for Compliance


Support Staff 40% x (358,722) = 143,488.8@$25 = $3,587,220

Professional Staff 50% x (358,722) = 179,361 @$55 = $9,864,855

Senior Management 5% x (358,722) = 17,936.1@$100 = $1,793,610

Legal Counsel 5% x (358,722) = 17,936.1@$144 = $2,582,798


$17,828,483



Mortgage Loan Originator- Registration/Update


177,473@$20= 3,549,460


Total: $21,377,943*


13. Capital, Start-Up and Maintenance Costs


None


14. Estimated Annual Cost to the Federal Government


None


15. Reason for Change in Burden


The entire change in burden hours, an increase from zero to 536,195 hours is a program change due to the creation of a new collection.


16. Publication


The public will have access to information in the Registry about a MLO’s employment history and publicly adjudicated enforcement actions.


17. Display of Expiration Dates


Not applicable.


18. Exceptions to Certification


None.


B. Statistical Methods


Not applicable.


*Hourly rates for occupational groups are averages using data from the BLS Occupational Classification System, and the average consumer cost of $20 is estimated from the BLS Economic News Release (Table B-3. Average hourly and weekly earnings of production and non-supervisory workers (1) on private non-farm payrolls by industry sector and selected industry detail).



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File Typeapplication/msword
AuthorKenton Fox
Last Modified ByIra Mills
File Modified2009-08-28
File Created2009-05-27

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